Frankfurt 2025 Recap

1. By making central bank money interoperable with blockchains, the ECB trials and experiments identified a solution to a major problem: regulated financial institutions want fiat currency to settle the cash leg of digital asset transactions but in ways that Stablecoins, tokenised deposits and deposit tokens cannot deliver – namely, changing next-to-nothing in terms of how banks use money every day. 2. Cryptocurrency traders and investors and alternative asset managers might be happy to settle trades using Stablecoins that trade at different prices even in the same currency but regulated institutions settling security and fund tokens or digital derivatives are demanding a single, universally available risk-free asset: namely, central bank money - and the ECB trials and experiments showed how it can be achieved. 3. The next challenge is to scale what the ECB trials and experiments proved, especially in conventional equity, bond and derivative markets, because at the moment almost all of the activity generating demand for Stablecoins takes place in the cryptocurrency markets and, if activity in tokenised securities, derivatives and funds does not accelerate, the ECB model of settlement in central bank money will become a white elephant. 4. The solution to the chicken-and-egg problem – to scale, token markets need cash on-chain, but cash-on-chain needs token markets that are scaled – cannot be found by putting tokenised cash and assets on the same infrastructure (or interoperable infrastructures) only, but it is a necessary condition of a solution because the benefits of tokenisation (in terms of peer-to-peer trading and programmable money) then become available. 5. The obvious mistake would be for policymakers and practitioners to get religion about issues such as disintermediation, centralised versus decentralised and private versus public because what the ECB trials and experiments show is that public policy, private profitability, centralised services such as clearing and netting and decentralised networks such as blockchains can be combined successfully to drive change.